Over the last 2 years, Adobe (ADBE) has followed a continual upward trend, beating Wall Street on both earnings and revenue estimates in each of its last 5 quarters. Share prices have followed suit and are now up 12.56% over the last 12 months. Expectations are high that Adobe can produce another strong quarterly report, especially with the favorable year over year comparisons. The Estimize consensus is calling for EPS of $0.62 and revenue expectations of $1.33 billion, 2 cents higher than Wall Street on the bottom line and 8 million greater on the top. On a YoY basis this predicts growth of 41% on earnings and 20% in sales. Given the recent streak of robust earnings it comes as no surprise that the company beats Estimize and Wall Street in 76% and 93% of reported quarters, respectively. Last quarter’s record revenue number has good chance of being topped tomorrow thanks to strong innovations in creative and marketing cloud segments.

Adobe’s two biggest drivers in the new age of cloud computing have been digital media and digital marketing. Digital media encompasses the company’s flagship Creative Cloud product which closed 2015 with 6.17 million users. As conventional licensing software becomes a thing of the past, Adobe has seen an uptick in adoption of its creative cloud offerings. Marketing Cloud finished the quarter with sales of $352 million, paired with strong bookings growth and significant customer adoption of SaaS-based solutions. However, lower end market demand, significant exposure in volatile European markets, and increased competition are significant sources of concern. Just last week, Google introduced a new enterprise marketing tool aimed to compete with Adobe’s core products. While it is still in its early stages of development, Google’s scale and reach is enough to cause concern in the Adobe camp.

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